About this Show

Closing Bell With Maria Bartiromo

News/Business. Maria Bartiromo. Analysis of the day's winners and losers in the stock market. New.

NETWORK

DURATION
01:00:00

RATING

SCANNED IN
San Francisco, CA, USA

SOURCE
Comcast Cable

TUNER
Virtual Ch. 58 (CNBC)

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
704

PIXEL HEIGHT
480

TOPIC FREQUENCY

Cyprus 27, Us 15, S&p 10, U.s. 10, Oracle 8, Starbucks 6, Howard Schultz 5, Russia 5, Derek 5, Citibank 4, Ron 4, Europe 4, Detroit 3, Eu 3, Ron Insana 3, Costa Rica 3, Schultz 3, China 3, Miami 3, United States 3,
Borrow a DVD
of this show
  CNBC    Closing Bell With Maria Bartiromo    News/Business. Maria Bartiromo. Analysis of the  
   day's winners and losers in the stock market. New.  

    March 20, 2013
    4:00 - 4:59pm EDT  

4:00pm
what's going to move this market down the road? we had cyprus over the weekend, but we've become enamored, or immune to that even at this point. >> i think you're going to focus more and more on the u.s. economic data a that we see. it's hard to predict what the surprise will be elsewhere in the world. as long as we see continued, you know, small improvements in the economic data, in particular on the jobs numbers, that's where we're really going to focus. >> jobs numbers? but at the end of the, corporate earnings. here we are, march 20th right now, the quarter is over in 11 days. once the quarter is over, we're going to all be focused on how the heck did the first three months of the year perform for corporate america? >> although i would point out, fedex numbers. that's troubling. that's a big company, an important company. >> you have to wonder if that's indicative. >> but it didn't phase the market today, otherwise. >> but it did take the transports down. >> usually it is a bellwether for the overall market, going forward. it is something you've got to keep your eye on and see if u.p.s. and some of these
4:01pm
transport companies, if you see any weakness there, that may be a negative sign going forward. >> i'm going to get ready for the next hour. see you tomorrow. >> say hi to howard schultz as well. >> we'll see you in a couple minutes. >> it gets a little wonky, but the fed chairman did point out, we fed governors, we're sort of learning as we go along here. they're making this up, because this is unprecedented, this bond buying program, this quantitative easing, as it's known, that they've been going through. they're refining the policy as they go, and i think they are certainly mindful of the impact they could have, if they suddenly put the brakes on this plan, rather than kind of tapering it off, which is what they're starting to signal they're going to do. >> they're signaling that. although you read the headline, they could slow it down or stop it at any time, but they can continue it as far as they want to as well. so they didn't give a real clear indication, but i think what they're doing, they're telling you that they're focusing in on that, and that's something they're going to be mindful of. >> bottom line for you as a trader? you're going to hang in here with this rally continuing? >> obviously. the higher you go, the more
4:02pm
trepidation you'll have, but i would be a buyer on any of the little pullbacks we're seeing, until at least i'm proven wrong, and so far i have not been proven wrong. >> warren, thank you very much. we're going off the highs, but still a decent gain at 55 points, but still no new high for the s&p 500 index. stand by, you've got the oracle earnings and howard schultz of starbucks on the second hour of the "closing bell." i'll see you tomorrow. it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to the "closing bell." i'm maria bartiromo. the bulls are back on wall street. the dow and the s&p 500 closed points away from record highs. tonight we saw money moving into equities. the dow jones industrial up 57 points, almost one-half of 1%, 14,513, just shy of another all-time high. nasdaq up 25 points, technology, one of the leadership groups today with a gain on the nasdaq at 3,254. and the s&p tonight up 10.5
4:03pm
points, sitting at 1,558, just a few points from an all-time closing high. let's get straight to the markets. we've got cnbc.com's jeff dotts, cnbc contributor ron insana, and our own rick santelli. good to see everybody. thank you for joining us. >> good afternoon, maria. >> i want to continue my conversation with rich peterson that i was just having in the break, that earnings growth. i know you've got all the stats that we want. first quarter earnings growth expected at up 0.6%, under 1% for the first quarter, earnings growth. second quarter? >> about 7.1%. we celebrate to 9% in the third quarter, according to the s&p capital iq statistics. and by the french quarter ourth this year, looking for a double-digit percentage. i see jeff shaking his heads. >> i have no idea where those numbers come from. we got those same numbers that we were supposed to see a 10% increase in the fourth quarter, 11% increase in this quarter.
4:04pm
we're obviously not going to see that. and i think that the reason is, if you look at fedex earnings today, we're just kind of seeing this economic slow global growth story. i don't know where these earnings are going to come from. >> well, you have lennard today, coming in the consumer discretionary sector doing very well. i talk about chairman bernanke saying hep doesn't lack at asset prices. but they are indirect beneficiaries of what the fed action is. when qe1 started in 2009, the mortgage rate at 6.3%, and now at 9.5%. who are the beneficiaries? the balance sheet of the consumer. >> you don't have to convince me about housing. i'm all on board, as far as housing goes. but i just think, it's just another part of the economy that's being left at a tivitate now, and where's the exit strategy? >> and i think revenue could be an issue. oracle is out with its third quarter. revenue came at 8.6 billion versus 9.3 billion, an estimate.
4:05pm
jon fortt has all the numbers right now. >> let's drill down to some numbers, maria. exactly where oracle missed, because this is a miss. on new license and cloud revenue, the street was looking for 2.57 billion. they came in at $2.3. on hardware product revenue, the street wanted somewhere around $800 million in research. they came in at $671 million. that's well below their guided range on that. and on non-gap operating margin, they came in at 47%, which is right about where the street was looking. they don't give guidance until the call, but this is really important, because they're guiding into their biggest quarter, their fiscal q4. also, larry ellison has said the hardware business was going to have a transition quarter in q3. we should expect to start seeing it growing in q4, given this hardware number, it's going to be especially important for them to be sticking to that, maria. >> all right, jon, thank you so much. the stock is down better than 5% here on this miss in terms of revenue. as you dig through those
4:06pm
numbers, jon, let me bring in some additional numbers in the mix. joining me is derek wood of susquehanna financial group. what's your knee-jerk reaction out of oracle right now? >> i think we'll need to hear about what the government vertical did. clearly, we had the sequester late in the quarter. that could have had impact on numbers. it's about 10% of revenue. we'll be looking for some color there. hardware revenue has been disappointing. i think seven our the eight last quarters. that certainly weighed on total revenue. we're projecting growth to get to positive levels in q1. we'll certainly want to get an update there. and the license revenue is a bit of a miss as well. so we'll be looking for more color on the government side. >> go ahead, jon. >> something i do want to mention on epps, it's technically a 1 cent miss, avenue cents when the street was looking for 66 in non-gaap. through there is a currency impact. oracle saying that constant
4:07pm
currency, it would have been 66 cents. but, again, many analysts have factored some currency in to their 66 cent estimate. so i'm not sure how much of that matters. >> well, i think that's a good point, jon. but i guess what ai'm focused o is revenue. >> yeah, particularly new license and hardware. >> right. >> particularly new license and hardware. i mean, ahardware, in particula, is an area where they've been promising this turnaround coming into the next fiscal year. that's going to be critically important. that's mark hurd's big area where he's been hiring up the sales force, 3,000 people they've hired in the last 18 months, getting ready to go to market. also, interesting to hear what the breakdown is going to be between new license and cloud. is cloud keeping up the way they expect? so, is the shortfall on the cloud side or the new license side? exactly how does that break down? >> derek, do you want to jump in here, derek? >> yeah, we estimated that foreign currency had about a negative $50 million impact relative to what we had put in our numbers three months ago.
4:08pm
so that was part of the miss, i would assume. >> well, i guess, derek, my question is, from this report, do you have any more color or information on technology spending? i mean, techs have obviously been a leadership in this market. if we are seeing a change, a reversal on actual corporate spending on technology, that would be a red flag. what do you see? >> yeah, well, oracle's a barometer in the space. and this is probably going to create some caution in terms of the expectations and overall i.t. spending right now. and, really, the level of priority in terms of i.t. spending. so, obviously, guidance is going to be critical. but this is going to be a little negative for the software space for tomorrow. >> all right. bottom lain here, derek, would you put new money to work right here in oracle at $33.74 a share? >> q4 tends to be their best quarter, so we would be taking advantage of weakness and buying into what historically is a
4:09pm
strong quarter in q4. >> all right, thank you, derek, thank you, jon. i'm back with ron insana and rick santelli. ron insana, we for you on earnings, we're hear debating the quality of earnings that we're seeing and what we are going to see in 2013. what's your take on what things look like, based on what you've seen so far? >> well, actually, maria, when i look at the earnings, people are worried about what's going on in china, i think, and this is kind of an evolution of the concept we've been talking about, with dawn of the american decade, i think to fortress america. when you look at earnings, the strength is coming from the united states. when you look at the flows of funds, money is coming here with every little hiccup in the world, whether it's cyprus, the broader picture in europe, the u.s. is doing remarkably well. so i think domestic earnings are going to look very, very good. there might be some shaving at the margins when you look at weakness overseas, but i think the u.s. is almost becoming immune to external shocks, and now the place where money will flow to, going forward on a regular basis, which is why the
4:10pm
stock market has held up so well. money goes into bonds, the dollar strengthening as both those asset classes continue to perform. that's an unusual sign. we haven't seen that linkage in quite a number of years. so i would really downplay the negatives here and accentuate the positives. i think the u.s. is in pretty good shape all the way around, include earnings and revenue growth domestically. >> ron, that is quite the casual look for a day at the office. are we at your house or are you traveling on vacation? >> i was giving a speech in palm beach this morning. i'm in miami with the family now for spring break, and i can tell you, it is so busy down here, there are new cranes -- after having built 80,000 condos in miami during the height of the boom, cranes are back up down here and they're adding another 13,000 condominiums after the old supply has been sopped up by foreign buyers. so miami is actually quite busy. i know it's spring break and it's typically a very busy time down here, but it's encouraging that the activity that you see
4:11pm
locally is quite brisk. i think that's true, pretty much, around the country, when you go as i do, from city and city, split work and vacation time. >> it's good to see that miami is so busy. you're supposed to be on vacation with your family. >> i'm counting cranes. >> rick santelli, jump in here. let's talk about the action that you saw today in terms of the fed and how it impacted stocks and fixed income. >> well, i think, when it comes to treasuries, we're on the higher end of the yield range, the lower end of the price range, but still five basis points under 2% in a ten-year. the dollar index now is only down 18. it was down about double that before fed. but what's really noteworthy, you're going to have some fun, probably going to see on "squawk box" with fair value now. because the s&p futures, which trade 15 minutes longer than the cash, have dropped about three or four quick points. that's notable. and to address jeff cox, i'm a big fan of jeff cox, and my answer to him is if he's looking
4:12pm
for organic, he better head to whole foods, because i think that's about the only place he's going to find it. and one of the gentleman on the trading floor, and we all listen to ben bernanke, we all have the toothpicks, we listen to him. one comment i found pretty funny was, he said that he reminded him of lawrence welk, it's wonderful, wonderful, wonderful, and the bubble machine is working. >> rick, let me pick up your point and i want to pick up on ron's point. i hope it's not some kind of metaphor for being asleep at the switch here, but i'm just wondering, where's the pricing power in this market? you don't see any movement on negative news? everything is positive? all that money that ron's talking about that's coming in, it's all chasing fake fed dollars. so i'm wondering -- >> no. >> -- where does the big pricing power come in. when you look at fedex and caterpillar and look at the emerging market growth now, how -- when was the last time the market has gone up for this long a period of time on no
4:13pm
economic growth. >> i don't know if you could really say no economic growth. >> 0.1% in the fourth quarter. >> housing has been doing really well. housing is doing well. corporate cash, $3.6 trillion on corporate balance sheets. >> maria, everybody -- >> m&a. >> m&a is a deterring indicator as far as market goes -- >> go ahead. >> look, let me deal with m&a activity. >> go ahead, ron. >> edgar's done a lot of work on m&a activity. so much stock is being retired from m&a activity and stock buybacks there's a net shortage in the united states. the wilshire 5,000, there are fewer than 3,700 stocks. this concept that the fed is somehow separate and apart from the fundamentals of what's going on in the economy i think is patently absurd. >> what do you think is going to happen to earnings and to the market when we get some level, any level of normalization -- >> rich just told us --
4:14pm
>> i don't think that's going to happen for two or three years. i think the fed will let all the assets roll off their balance sheet, they're not going to sell. they'll remit the coupons to the treasury, and that's the way they'll exit very gently and gracefully. i think people are misapprehending what the fed is doing. >> what are you doing to do, ron? raise rates on reserves 20 or 30 basis points? because when the dam breaks, the banks are going to look at that and go, i'm going into the real world where there's 7, 8, 9, 10%? because the velocity is going to be the anti-fed exit. >> no. i think that's fantasy. i think that's made up stuff. >> what we're doing now is fantasy. >> well, bernanke was asked today if he's spoken to anyone unemployed, he said he has family members unemployed. >> and the fed has said, they're going to bring the unemployment rate down to an acceptable level -- >> how exactly are they going to do that, ron? >> more people are going to quit
4:15pm
la looking for work -- >> no, no. >> five years after the prices, i would certainly expect it ought to be going down. in five years after a crisis, i would certainly expect housing would heal a bit. thank you, father time! >> this is the bottom of the recession in 2009, it's up 30%. that's off its peak in '07. >> and detroit's about to go bankrupt. >> come on, detroit's on fire! have you looked a to the out sales numbers in the last six months? >> look at it from the bottom, maria. >> we wrecked all the cars for cash for clunkers. >> no, no, no, no. >> that's not entirely wrong, about detroit -- >> you can't make up facts. >> auto sales, pleamaria, has g from 9 million -- >> yes, i know that.
4:16pm
we've got to run. i'm getting harassments in my ears here because we're out of time. but if you want to talk about debt, how about $16.5 in debt. that's another conversation. thank you very much. we'll see you soon. appreciate your time today. federal reserve keeping its stimulus plan in tact, forecasting moderate growth as well. take a short break and after that, we'll find out what it means for your money with two economist who is know their way around the halls of the fed. and then live to cyprus where the banks are still closed and the situation is becoming more muddled and more dangerous for the global markets. would you put your money in a cyprus bank right now? and then starbucks bought a coffee farm. wait until you hear what they plan to do wit. coming up, we'll talk starbucks business with chairman and ceo, howard schultz. that and a lot more, stay with us. ]just when you thought you had experienced performance a new ride comes along and changes everything. the powerful gs. get great values on your favorite lexus models during the command performance sales event. this is the pursuit of perfection.
4:17pm
departure. hertz gold plus rewards also offers ereturn-- our fastest way to return your car. just note your mileage and zap ! you're outta there ! we'll e-mail your receipt in a flash, too. it's just another way you'll be traveling at the speed of hertz. has an equally thrilling, lesser-known counterpart. conquer them with the exhilarating is 250. get great values on your favorite lexus models during the command performance sales event. this is the pursuit of perfection.
4:18pm
okay. [ male announcer ] with citibank's popmoney, dan can easily send money by email right from his citibank account. nice job ben. [ male announcer ] next up, the gutters. citibank popmoney. easier banking. standard at citibank. to deposit checks from anywhere.
4:19pm
[ wind howling ] easier than actually going to the bank. mobile check deposit. easier banking. standard at citibank. welcome welcome back. the dow and the s&p 500 pushing the towards record highs. josh lipton is running through the winners and lauosers. >> the s&p 500 comes within a few points of its record close. the midcaps, though, did hit another record high. as for notable movers, let's start with the biggest gainer in the s&p 500 today. that was first solar, rocketing
4:20pm
higher. the reason, analysts telling me, china's sun tech, a solar panel maker, declaring bankruptcy. so now the possibility of some capacity disappearing, getting investors excited about first solar's prospects. another big winner to check out, lennar, the home builder. lennar's president saying the president is seeing a strong start to the spring selling season, compared to the previous year. others notable winners today, adobe, best buy, and d.r. horton. and we have to mention blackberry, ripping higher on heavy volume. morgan stanley upgrading that stock to overweight. the analysts seeing blackberry 10 devices boosting margins. now, on the flip side, notable laggards included fedex welcome which reported a 31% drop in third quarter earnings that missed the street's expectations. also in the red, deere, analysts expecting demand for farm equipment to weaken. and we'll end here on facebook, one of the most actively traded stocks today.
4:21pm
btig saying that the speed at which facebook is rolling out new products could signal its struggle to live up to expectations for ad growth. btig says facebook is a sell. price target, 22 bucks. maria, back to you. >> josh, thank you so much. anticipating a, quote, return to moderate economic growth, end quote. that's the fed statement and it said so a short while ago that it is not changing its stimulus program and won't until unemployment significantly comes lower. here to dig through the details of the fed statement today, dean baker, former consultant to the world bank, now a co-director at the economic center for research, and doug holtz-eakin, an ex-director of the congressional budget office. good to see you both. thank you very much for joining us. let me kick it off here with my surprises from bernanke and the federal reserve. >> zero surprises. this is exactly the statement you would expect. and i think it covers exactly the debate they're having
4:22pm
inside, and not talking much about it. >> dean, you agree with that? >> i think doug's on the mark here. we've been seeing somewhat better growth, and they acknowledged that, but basically they're holding the course, continuing quantitative easing for the indefinite future. >> is it time to start reeling in qe? what's your take in terms of where we are in the economy, relative to the fed's policies? >> i think it's time. i personally think it's past time. i've always thought that qe3 had minimal benefits for real economic growth. it is the case that the economy's caught up with the fed policies. the housing sector is coming around, vehicle sales are coming around, but i don't think that's a tribute to the fed. it just happened on their watch. and the rescues on the other side i think deserve consideration. so i'd real it back. >> so that means you think the economy's fine? >> i think the economy's getting better and it's not getting any better faster because of the fed. >> and yet, we don't know how this whole cyprus, european debt crisis plays into things.
4:23pm
dean, what's your take on that? should the federal reserve be more worried about cyprus than bernanke appears to be? >> no, i'm not that worried about cyprus. i think there are obviously issues there, but i think they're very much containable. obviously, the ecb, i don't know what they thought they were doing there. they were clearly unprepared for the reaction, which is a little startling, but i don't think that's going to be a big conflagration. but what i would say, you know, i disagree with doug, i don't see a downside. for me, the risks are very symmetric. we're still very, very far from anything resembling full employment. you have to look very hard to find any basis for inflation in this economy. although i would agree the qe doesn't have a huge effect, it's something you could do. if you can boost the economy with no real risk to inflation, why would you not do that? >> i think the key is that they're spending bullets every day when they do this. and if cyprus turns into a broader your problem, they'll want to have ammunition to fight back, and they should. i worry about them doing things when they don't have to.
4:24pm
and they proven. it's hard to say this when you're sitting on the floor of the stock exchange, they've proven they can drive investors to risk areas asset classes. it isn't proven that that generates jobs. >> jobs is the number one priority. they're looking at the unemployment rate going down to 6.5% before they actually start reeling this in. is that right number? >> i'm prepared to reel back some now, so obviously i'm in a different place. if they had great control over the employment rate, i understand why you would stay with your foot on the accelerator until you got there. but i don't believe why they think they're having that big of an impact. >> second half of the year, dean, what are you expecting? >> i'm expecting moderate growth. maybe if we're lucky, we'll get to 2% in the second half. if we end the year with lower unemployment rate than we have today, we'll be very lucky. >> we'll leave it there. gentleman, great conversation, thank you so much. up next, we'll take you live to cyprus, michelle
4:25pm
caruso-cabrera on the ground live with the latest developments on the debt crisis there. we'll talk with a local business insider who's extremely concerned about the fate of his country's economy. and later, if the fed is calling for moderate growth in the economy, that has to be good news for the world's largest coffee chain, right? howard schultz will talk with me and i'll get his reaction to developments in europe and today's shareholder meeting. and on a lighter note, watch out, superman, schultz is now a comic book hero. we'll get the lowdown on his super powers, next.
4:26pm
4:27pm
4:28pm
welcome welcome back. officials in cyprus struggling to avoid a financial meltdown after its parliament rejected an international bailout package that would have taxed savers and depositors. michelle caruso-cabrera is on the ground right now. she joins us live with the very latest from cyprus. over to you, michelle. >> reporter: hey, there, maria. the very latest that the cyprus plan tried in part trying to raid a pension fund. cash in the pension fund used now and promising to pay the workers later. but their european partners said, no, that's not going to work, because all you're going to do is defer liabilities. it doesn't help your debt profile. so we don't like that. now they're working on plan "c." the question is, what is that? here's the very latest, the bank holiday, as a result of all of this indecision and inaction has been extended and now it looks like the banks will not open until tuesday of next week, a full week without the banking system operating. the minister of finance is in russia, trying to square away a
4:29pm
deal there. we haven't had any good results from there. and then very, very worrisome, a member of the ecb talking even tougher late today, suggesting that if they don't come up with a deal here in cyprus soon, where cyprus somehow contributes 5.8 billion euros to its own rescue efforts, that they could possibly cut off liquidity. right now, since the banks are closed, people can only use atms. we're lucky in this day and age, we have atms, that's an option. remember when there weren't atms, during the depression? so they have been flying in cash and supplying the atm machines so people can get out money. but businesses can't get their working capital, and if the ecb suddenly decides to cut the country off, because in theory they shouldn't be helping out insolvent banks that are here, then you could have a complete financial collapse. so the government's got to do something. maria, back to you. >> michelle, the options here are just extraordinary. michelle caruso-cabrera on the ground right now in cyprus.
4:30pm
thank you so much. the cypriot government is looking for any alternative it can find, rather than accept that eu proposal. earlier today, cyprus' finance minister was in moscow meeting with his russian counterpart. hays trying to get a new loan while extending a current loan with more favorable terms. he walked away from the meeting without a deal. he says he'll stay in moscow, though, to continue these negotiations. george theo krooets is with cyprus international institute of management. he says the demands being imposed on cyprus are unfair. good to have you on the program, sir. thank you for joining us. >> yes, thank you for inviting me. >> so what is the me think sent when cyprus would rather negotiate and deal with russia rather than the eu? what's the message that the cypriot officials would rather negotiate with russia than the eu? >> look, i mean, it was a position that was taken by the euro group last friday, which i
4:31pm
think the whole world understands that it was an unfair decision. it was the first time that the european commission and ecb decided to have a haircut on depositors, which has never been done anywhere else. and basically, our parliament, our president came back with a suggestion by the euro group that we have to do a haircut on depositors in order to save cyprus. the parliament decisioned this is an unfair decision. you don't take money out of insured depositors. we're talking about even insured depositors, because according to the rules of the european union, up to 100,000 euros, they're supposed to be protected by the central banks and by the ecb. and now we're having a haircut on insured depositors. this was a decision taken by the euro group that could not be accepted by our parliament. and yesterday there was a vote at the parliament that decided
4:32pm
that we cannot go ahead with this decision. and now we're looking at a plan "b." and the troika, basically, they told us that you have to find 5.8 billion euros, because they're giving us 10 billion euros for the help of cyprus. and our government is trying with different ways to find that kind of money. and we came up with a lot of suggestions today to troika, but unfortunately they're reject all of our suggestions. and we have close ties with russia. yes? go ahead, yes. >> were you surprised in the fact that parliament rejected this proposal? what is the risk in rejecting the eu's idea for a bailout? >> well, i mean, we understand that there's a lot of risk here involved. i mean, we know that our banking sector is actually having major
4:33pm
financial troubles. we know that one of our major banks is actually providing -- it has been provided liquidity from the ela, the emergency liquidity assistance of the european central bank. so we understand the risks involved. but this is something that we could not accept. and i'll tell you the reasons why we could not accept this. it is not just the loss that we have from insured or even insured depositors, but it's because we are a financial center. the whole economy of cyprus, the last 15, 20 years has been built on this issue, on being a financial sector, of having good reputations to our foreign clients, whether they're coming from russia or other european -- >> i understand the hopes. i understand the hopes. bottom line, do you think cyprus is going to go bankrupt? >> no, i think at the end of the day, a solution will be found. i don't know if there's going to be involvement by russia as
4:34pm
well, but i think at the end of the day, there has to be a solution for cyprus. and i think it will be found. i mean there is the desire by our government, not to let the economy collapse. and i think the europeans, they don't want cyprus to collapse as well. they don't want -- at least, to my opinion, they don't want a country that is part of the euro zone left alone and having to get out of the euro or the european union. i don't think it's going to happen. i think what's going to happen is that there's going to be a painful agreement for cyprus, but i think at the end of the day, there's going to be, there's going to be a solution to this problem. >> george, good to have you on the program. we so appreciate your time, george theocharides joining us on the ground. howard schultz will join us next. hear how he plans to literally grow the coffee beans into shareholder returns. back in a moment #. (announcer) scottrade knows our clients trade
4:35pm
and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company."
4:36pm
♪ i don't want any trouble. i don't want any trouble either. ♪ [ engine turns over ] you know you forgot to take your mask off, right? [ siren wailing in distance ] ♪ [ male announcer ] introducing the all-new beetle convertible. now every day is a top-down day. that's the power of german engineering.
4:37pm
welcome welcome back. my next guest runs the largest coffee chain in the world. he led starbucks to record revenue in 2012 and has made some key acquisitions with his latest raising eyebrows, a coffee farm in costa rica, just
4:38pm
this week. howard schultz joins me now. good to have you on the program. >> thanks, maria. how are you? >> good. let's talk first about the shareholder meeting. a lot of shareholder complaints recently in business generally. what are you hearing from shareholders, particularly with those red flags coming out of europe? >> we had our meeting with 5,000 shareholders that lasted over two hours. you know, we used it as a brand building event. we took them through the event there was a 38% shareholder return last year. we're accelerating our growth in u.s., china and india, and our business in the grocery stores continues to be a very robust. the big news of the day was taking our loyalty program and our mobile payment business, which is very strong, in our retail stores, and leveraging it into the grocery stores. so a customer buying a pound of coffee or a bottle of frappuccino at their local grocery store will get a reward and an incentive to bounce back into the u.s. retail stores,
4:39pm
leveraging technology and the loyalty of our customers. >> yeah, you have been leveraging technology for a little while. how is that partnership with square going, howard? >> really well. we made a $25 million investment in square, because of the seismic change in technology, and specifically, smartphones. we are now the leading retailer and consumer brand in the world in terms of mobile payment transactions, over 3 million a week. and that has enhanced the customer service and also produced significant incrementalty as, as well. so we are, i think, a very enthusiastic about global haven, our partnership with square, and these are var early days of what we're ultimately going to be able to do. >> i'm going to come back to this, because i'm wonder ing if there is a learning curve that your folks need to get trained on in terms of really utilizing square. i was reading a story early, that some people had had trouble
4:40pm
with it. but i think that square partnership is just so smart. the whole idea of square, i think, is so smart. but let me ask you about that shareholder vote on a potential ban on making any political contributions or forming a political action committee. that was put forth with activist shareholders. what was the outcome of that vote, howard? >> our shareholders voted against that very strongly. but the truth of the matter is, we do not make political contributions. there was a lot of noise about that, but, honestly, it was not a very relevant shareholder proposal and the shareholders voted en masse in favor of the company. so we're in a position today, where our shareholders have been rewarded, not only in terms of the stock price appreciation, but also dividends. and we laid out a strategy today that will open up at least 3,000 stores over the next five years in the americas, half of that in the u.s., and we'll have 1,500 stores alone in mainland china by the end of 2015. so right now, if you look at the
4:41pm
u.s. business, which is quite strong, and these other business units that are coming online, and then threading into that the best of class technology, in social, digital media and mobile payment, we're in a situation where we're lowering the cost of customer acquisition and leveraging multiple channels of distribution, that puts us in a very unique position to win. >> and you're also on an acquisition trail. we saw it with evolution fresh. we saw it with tivana. should investors expect even further details in 2013? >> i would say that, if we do make anymore acquisitions, they will be very, very strategic and very pointed to the fact that we want to add high-quality products and categories that would enhance the customer experience in our stores. we're off to a fantastic start with evolution fresh and the 300-store acquisition of tivana. we believe we can have at least a thousand stores where we can
4:42pm
do for tea what we've done for coffee. and eventually we'll take teavana outside of north america. so these are all strategic acquisitions that significantly will do two things. enhance the customer experience and provide long-term value for the shareholder. >> and this week, you acquire your first farm based in costa rica. tell me about that strategy, howard. how important is this farm to the overall strategy? one purpose you've talked about was the battle -- is to battle coffee rust, which is a fungal disease plaguing the coffee industry. was that the reason for the acquisition? >> no, with that was not the primary reason. we are the largest buyer of high-grade coffee in the world. we bought that farm for two reasons. to create very high-end, significant, sustainable practices that we can use as a model to teach other farmers around the world. and secondarily, and this is
4:43pm
very important, we believe that it is an opportunity to use technology and best practices to cross varietials, not unlike the wine industry with grapes, and create microlots of very special, rare, very high-quality coffee that does not exist, that we can bring into our stores and provide long-term differentiation between us and everybody else. so this is part of our vertical integration, and this will be the beginning, i think, potentially, of other acquisitions we will make, in terms of vertical integration, which will ultimately put us in a better position of not only supply, but differentiation in terms of quality, not unlike the wine industry. >> so, what does that mean in terms of pricing? should folks believe that given more supply, praiices you down? >> well, i would say that what we plan to do in costa rica is produce the highest quality coffee available anywhere, and the cost of doing that will be pretty expensive.
4:44pm
so those coffees that come out of costa rica, under this farm, will be premium priced, because of what they stand for. and there'll be microlots, very small amounts of coffee that we'll be able to sell, but they're rare coffees that you can't get anywhere else. >> okay. let me move on to what's going on in the u.s., howard. what are you seeing in terms of economic growth. i know you created create jobs for the usa initiative. that's about one year ago, in november, reaching $15 million in donations. are you seeing the needle move in terms of jobs in this country in terms of opportunity and growth? >> i think when the 2% payroll tax went into effect in february of last month, the entire retail and consumer category, in terms of consumer behavior, was modified, as a result of that 2%. we have since, and i think others have seen it come back,
4:45pm
so that was a tough period, where people had to adjust for that 2% dilution in their paycheck. i am cautiously optimistic about the economy. it seems as if, despite the unemployment, despite the debt, that consumers are spending, and we are enjoying the same level of success that we've enjoyed the last 12 months in the u.s. business. having said that, i think one has to be incredibly concerned about the fragile nature of western europe, what's happening in cyprus, and other geopolitical issues that ultimately affect the united states. >> what about the minimum wage in this country, howard? is $7.25 enough. lots of pushes to take that up to $9, as president obama has talked about. the average starbucks barista, according to glassdoor website, makes $8.78 an hour. >> well, that's a little misleading, but i'll come back to that. you know, i think the minimum wage issue is a double-edged sword. and what i would not want to see
4:46pm
is the minimum wage go up and as a result of that, employers starting to hire less people or cutting people's hours. and you have to be very careful of the unintended consequences. on balance, i am a supporter of the minimum wage going up, but i think we've got to be very, very careful and be careful what we wish for, because some employers, and it could be a lot of them, will be scared away from hiring new people or creating incremental hours for part-time people as a result of that wage going up. so you've got to be very careful and this has to be very thought out. and i would say, in terms of the health care law, that's going to go into effect, there are significant unintended consequences that was not thought out as much as it should have, that will significantly affect the cost structure of small businesses. and this is an example, where i think you've got to be very careful with this kind of transformation legislation that
4:47pm
ultimately, perhaps, has a negative effect on the economy. >> and did you want to get to something you said was misleading? >> well, i think -- that's the starting wage that you're talking about, but most starbucks people are highly tenured and are tipped throughout the day. so it's not a real number. >> and before you go, you've got to give us some reaction to this comic book, basically, about your life. you're now a super hero, howard. >> you know, that's one of those things where i just woke up one day and i could not believe that someone would spend the time writing a comic book about me. there must be a lot more important things to do. >> howard, good to have you on the program. we appreciate your time tonight. >> thanks, maria. >> howard schultz is ceo and chairman of starbucks. let's get to john harwood. he has some breaking news. >> maria, we are not going to have a government shutdown on march 27th when the current government funding bill runs out. the senate has just passed its
4:48pm
version of the so-called cr with more than 70 votes in favor. the house plans to pass it tomorrow. and again, it reflects the fact that the fiscal fights that were at fever pitch throughout 2011 and 2012 have now been defused. both sides are working at a much slower pace, less of a crisis atmosphere, maria. >> all right, john, thank you so much. feeling cramped at the back of the plane? wait until you hear what the largest airlines are doing to keep business class flyers flat-out happy. of course, it all comes with a price. stay with us. [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade.
4:49pm
[ female announcer ] what if the next big thing, isn't a thing at all? it's lots of things. all waking up. connecting to the global phenomenon we call the internet of everything. ♪ it's going to be amazing. and exciting.
4:50pm
and maybe, most remarkably, not that far away. we're going to wake the world up. and watch, with eyes wide, as it gets to work. cisco. tomorrow starts here. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc and don't get heartburn in the first place! [ male announcer ] one pill each morning. 24 hours. zero heartburn.
4:51pm
welcome welcome back. with planes packed and customers willing to pay more for extra perks, airlines are going the distance to win over higher-paying customers. phil lebeau with the story. phil? >> maria, this is all about airlines trying to get more revenue out of their transcontinental business class seats. here's what's going on. this week, united started roll outing out plans that have lie flat seats in their business class, but this is only for those flights between los angeles, san francisco, and new york. and by the way, they will have fewer seats in business class, with this configuration. other airlines are following. they've got delta at the end of the month, jetblue announced they'll have something next year. and this is all about targeting those premium service customers, especially in those lucrative markets like san francisco, los angeles, new york, and washington, d.c. as you take a look at the airline stocks today, note that they are all up, maria. and we are at a six-area high. a six-year high for the airline
4:52pm
index. it's had a heck of a run in the last year, maria. up 51%. in the end, maria, this is all about doing more to win over those corporate customers in those lucrative markets. maria, back to you. >> phil, thank you so much. and i hope you'll watch and join me for my exclusive interview with delta airline tomorrow, 3: p.m. eastern here on "closing bell." what will take the dow to new highs tomorrow? and will it be the day for s&p to break its own record? we'll weigh in on your money. stay with us. ♪ twith blackberry hub10 and flick typing. built to keep you moving. see it in action at blackberry.com/z10.
4:53pm
let's say you pay your guy around 2% to manage your money. that's not much you think. except it's 2% every year. does that make a difference? search "cost of financial advisors" ouch. over time it really adds up. then go to e-trade and find out how much our advice costs. spoiler alert: it's low. really? yes, really. e-trade offers investment advice and guidance from dedicated, professional financial consultants. it's guidance on your terms, not ours. that's how our system works. e-trade. less for us. more for you.
4:54pm
4:55pm
welcome back. welcome back. 30 seconds on the clock, what could move the market and your money tomorrow. and if we'll see the s&p at an all-tie high. good to see you both. quinn, kick us off. what do you want to be prepared for tomorrow. >> all right, maria, obviously we want to be watching the jobless claims numbers, the housing number, the philly data. all that will be important and could be a catalyst, maria. but we are continuously being cautious here as ridiculous as it feels sometimes. we're watching the breakdown in copper. we're watching the breakdown in emerging markets and we're seeing these stocks like fedex
4:56pm
and oracle after hours tonight and caterpillar guidance which are signaling signs of real caution for us going forward here. >> drew, you're up, what do you want to be prepared for tomorrow? >> thanks, maria, we'll be watching the eurozone pmi data due out in the morning. eurozone in the headlines this week and if we see a print below 47.9, that'll market the second monthly decline. it's important for our market because if you look at the last two declines of greater than 10%, they were precipitated from concerns emanating from europe. if we get weakness in the data, we'll recommend to investors they begin to get more defensive, alternatively, if we see good data, we'll continue to ride the wave of the fed-induced liquidity tsunami. >> all right. we'll be watching. gentlemen, thanks very much. a lot of stuff to get prepared for tomorrow. we'll see you soon. thank you. up next, my observation on what's happening in this market. ♪ [ laughter ]
4:57pm
♪ [ female announcer ] each one of us is our own boss. ♪ and no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. ♪ [ male announcer ] this is a reason to look twice. the stunning lexus es. get great values on your favorite lexus models during the command performance sales event. this is the pursuit of perfection.
4:58pm
4:59pm
departure. hertz gold plus rewards also offers ereturn-- our fastest way to return your car. just note your mileage and zap ! you're outta there ! we'll e-mail your receipt in a flash, too. it's just another way you'll be traveling at the speed of hertz. and and finally today, my observation on the so-called dow theory. one of the oldest theorys of technical investing is called dow theory. and very simply it tells a story of companies that make things like the dow jones industrial